House passes fiscal cliff deal

posted at 8:01 am on January 2, 2013 by Mary Katharine Ham

House Speaker John A. Boehner (Ohio) and most other top GOP leaders took no public position on the measure and offered no public comment before the 10:45 p.m. vote. Boehner declined even to deliver his usual closing argument, leaving House Ways and Means Committee Chairman Dave Camp (R-Mich.) to defend the measure as the “largest tax cut in American history.”

The bill will indeed shield millions of middle-class taxpayers from tax increases set to take effect this month. But it also will let rates rise on wages and investment profits for households pulling in more than $450,000 a year, marking the first time in more than two decades that a broad tax increase has been approved with GOP support.

Earlier in the day, the GOP caucus had entertained the idea of amending the Senate bill, which the Senate claimed it would not touch, thus ending this toxic game of ping-pong with a trip over the cliff as the markets opened today. By the time the GOP caucus met for the second time Tuesday, at 5:15 p.m., the tone in the room was reportedly vastly different than it had been earlier in the day. The Speaker offered to bring the bill to the floor for spending-cut amendments if 218 Republicans were in favor of it, but even conservative votes were backing off late Tuesday:

if even the right wingers aren’t on board, then the amendment path fails. Fleming, Labrador, others say they are against it.

I’m with Phil Klein on this, that the deal is an objectively horrible one, but a relatively good one, given the options. He writes a helpful Good, Bad, and Ugly of the bill, here. Although I hate the Bad and the Ugly, I think some underestimate the Good of getting most of the Bush tax cuts extended permanently. Democrats never wanted any of them to be permanent, and indeed denied the existence of any Bush tax cuts for anyone other than the rich until two years ago when Obama suddenly discovered these tax cuts for the middle class. As of today, if the bill hadn’t passed, the tax cuts Obama and Democrats denied existed for 10 years would have become the Obama tax cuts. And don’t forget, they want and need taxes to rise on the middle class to pay for the level of government spending they want to perpetuate. I know some are in favor of making that happen to teach the middle class exactly what government costs, but I’m not sure that does anything but undermine the central rationale for voting Republican. In the future, these rates for everyone under $450K are a better baseline for broader tax reform that we would have had if we’d persisted in renegotiating this deal in a new Congress, over the cliff, with a more liberal Congress.

What has been shocking, however, is that I’m seeing a number of conservative critics blasting the deal for increasing deficits by $4 trillion when about 92 percent of that projected increase comes from tax cuts that they support. Brent Bozell, for instance, issued a statement calling the deal a “surrender,” complaining that “not only does this bill fail to make meaningful spending cuts, it actually spends another $4 trillion we don’t have!” Excuse me? For decades, conservatives have been complaining — for good reason — whenever liberals conflate tax cuts and spending. Now, in campaigning against this fiscal cliff deal, they are following the lead of liberals.

Let’s just take a moment to remember why this is so significant. By describing tax cuts as a “cost” and as “spending” as liberals typically do, it suggests that all income is effectively the federal government’s to keep. Anything less than 100 percent taxation is effectively a subsidy if this line of reasoning is followed to its logical conclusion. However, conservatives have always rightly argued that it’s the people who have the right to their own earnings. When Americans pay fewer taxes than they otherwise would, it doesn’t represent a cost — it represents savings.

This deal does increase deficits by nearly $4 trillion, according to the Congressional Budget Office — but more than $3.6 trillion of that amount comes from forgone tax revenue.

All that being said, the deal is indeed a crap sandwich. Looking back, I wonder if it could have been better if House Republicans had voted for Plan B, which raised rates on those making $1 million and up, but I don’t see a scenario where it would have gotten better after today. Do you?

The deal did not include any resolution on either the sequester or the debt limit. If there is a silver lining for Republicans, it’s that they have successfully delinked tax rates and spending issues in this fight. The next round of bargaining will deal only with government spending, and House Republicans will have the debt ceiling as a powerful card to play.

It wasn’t an intentional delinking, but more of a delinking dictated by defeat, but it does make Obama’s pitch for a “balanced” approach sound even more dumb the next time around. The GOP must make crystal clear in that discussion that every cent gained by this “fair share” approach Obama harped on for two straight years has already been spent, already gone, out the door. Most of the American people truly do not understand the gravity of the debt problem, which is why Obama can trick them into thinking this is a solution. What we’ve got here is a failure to communicate. The problem is we must rely on Republicans to communicate.

I’ll leave you to watch Krauthammer decry “complete surrender.” He makes an interesting argument for how Republicans could have improved the situation at this late date by putting forth a cleaner version of this bill on day one of the new Congress, staking claim to the tax cuts and eliminating a lot of the pork in the Senate version. Not a bad idea, but I’m not sure I trust Republicans to pull off something so deft, which is really the problem with all of these negotiations, isn’t it?

Blowback

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